Re: Shrinking Deficit
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In july at its mid-session review,President Bush's Office of Management and Budget projected a 2007 budget deficit of $205 billion.
On thursday (8-23-07) the Congressional Budget Office released its own updated estimate for 2007 of $158 billion, a deficit even smaller than the White House's july figure.
The CBO also released its latest estimate of the 2007 deficit as a percentage of the Gross Domestic Product. The CBO estimate of 1.2% of GDP was also lower than that of the White House's july estimate of 1.5% of GDP,and well below the 40 year average of 2.4%.
In other words,the case is stronger than ever that President Bush's tax cuts, rather than creating a budget deficit,are fueling enonomic growth that is increasing federal revenues and shrinking the deficit.
Now I think the real question should be whether the deficit will keep shrinking if the extravagant spending Democrats gain control not only of Congress but also the White House. The last time a Democratic President cut the deficit,he did it by raising taxes,not cutting them.
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If you print up lots of new money and inject it into the economy, tax revenues will go up. This is not a good thing.
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